Mortgage lender Halifax has released the findings of its latest UK house price survey, showing the highest annual increase since June 2010, with UK house prices rising by 5.4% in the year to August.
Data from the study showed that the average price of a home in the UK is now GBP170,231. September 2008 was the last time house prices were higher than GBP170,000, however the figures are still well below the peak of the market in August 2007, when the average price was almost GBP200,000.
Housing market activity is on the rise as a result of low interest rates and a pick-up in the economy, as well as the Help to Buy scheme, which offers a government-backed loan of up to 20% of the price of a property.
The number of mortgage approvals for house purchases has also grown, rising by 10% between the first and second quarters of 2013. There were
60,600 approvals in July, the first time in five years that the number has exceeded 60,000.
Martin Ellis, the Halifax’s housing economist, said that house prices are expected to rise gradually over the rest of the year, although the Halifax believes that below-inflation pay rises will act as a brake on the market.
A short-term imbalance between housing demand and the number of homes on the market is driving price increases, according to Matthew Pointon, property economist at consultancy Capital Economics. Pointon added, however, that the rise in wholesale interest rates seen over the past few weeks could soon feed through to mortgage rates, dampening demand.
Mark Carney, governor of the Bank of England, said last month that he was “acutely aware” of the risks and could employ various measures to combat unrestrained mortgage lending.